How is a Renovation Loan different from a normal home equity loan or HELOC?

A home equity loan or home equity line of credit (HELOC) allows you to borrow against the current value of your home, whereas Renovation Loans allow you to borrow against the after renovation value or future value of your home. For homeowners who have been in their homes for 10+ years, borrowing against current home equity is fine because they’ve built up a lot of equity over the years and don’t have as large of an outstanding mortgage balance. But for recent homebuyers, a true renovation loan often offers higher borrowing power. It is important to note that if you take a Renovation Loan there is no guarantee your home will increase in value and, in rare cases, you may owe more than your home is worth.

How is the after renovation value of my home determined?

After renovation value is the estimated value of your home after your renovation is complete. You can estimate your after renovation value by using the current value of your home, plus the added value of your planned renovations. Homeowners can borrow up to 90% of their home’s after renovation value through a Renovation Loan. You can find out your home’s after renovation value by getting an “as-completed” appraisal on your home. This appraisal is based on the proposed renovation plan, on the condition that it is completed. Contact us to see if a renovation loan is a good fit for you.